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Q2. (a) Bintang Berhad is deciding whether to proceed with Project A or Project B. Given below are cash flows information relates to Project
Q2. (a) Bintang Berhad is deciding whether to proceed with Project A or Project B. Given below are cash flows information relates to Project A and Project B. Assume the discount rate is 10%. Year Project A 0 (1,000,000) 1 400,000 2 400,000 3 400,000 4 400,000 5 400,000 Project B (1,000,000) 352,000 300,000 300,000 400,000 450,000 The company's required rate of return is 12%. The desired payback period is three years. (i) Determine the net present value for both projects. (ii) (8 marks) Advise with reasons which project(s) should Bintang Berhad invest in based on the calculation in (a) if both projects are independent project. (2 marks) (ii) Advise whether Bintang Berhad should invest in Project A or not based on computation of payback period
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